Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 1997
|_| Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the transition period from _______ to _______
Commission File Number 0-16843
ATEL Cash Distribution Fund, a California Limited
Partnership (Exact name of registrant as
specified in its charter)
California 94-2985201
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
235 Pine Street, 6th Floor, San Francisco, California 94104
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 989-8800
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X|
No |_|
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEET
JUNE 30, 1997
(Unaudited)
ASSETS
Cash and cash equivalents $214,343
Accounts receivable, net of allowance for
doubtful accounts of $22,097 (3,147)
Investment in leases and equipment 157,785
---------------
$368,981
===============
LIABILITIES AND PARTNERS' CAPITAL
Non-recourse debt $135,609
Accounts payable and accruals 6,662
Accrued interest 1,047
---------------
Total liabilities 143,318
Partners' capital:
General partners 21,315
Limited partners 204,348
---------------
Total partners' capital 225,663
---------------
$368,981
===============
See notes to financial statements
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Six Months Three Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Lease income:
Operating $42,944 $57,074 $18,770 $27,878
Direct financing 5,826 24,691 2,254 11,663
Gain on sale of equipment 25,000 5,196 25,000 -
Other 2,986 25,955 2,340 25,946
Interest income 1,710 361 1,134 215
-------------- -------------- --------------- ---------------
78,466 113,277 49,498 65,702
-------------- -------------- --------------- ---------------
Expenses:
Depreciation 17,686 21,572 8,177 10,562
Other 8,124 4,647 5,940 3,045
Interest 6,655 8,358 3,216 4,078
Professional fees 4,363 5,035 3,094 3,797
Taxes 3,045 3,326 3,045 3,326
Provision for losses - 1,133 - 1,133
-------------- -------------- --------------- ---------------
39,873 44,071 23,472 25,941
-------------- -------------- --------------- ---------------
Net income $38,593 $69,206 $26,026 $39,761
============== ============== =============== ===============
Net income:
General partners $386 $692 $260 $398
Limited partners 38,207 68,514 25,766 39,363
-------------- -------------- --------------- ---------------
$38,593 $69,206 $26,026 $39,761
============== ============== =============== ===============
Net income per limited partnership unit $1.91 $3.43 $1.29 $1.97
Weighted average number of units outstanding 19,962 19,962 19,962 19,962
</TABLE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partners Total
<S> <C> <C> <C> <C>
Balance December 31, 1996 19,962 $277,924 $20,929 $298,853
Net income 38,207 386 38,593
Distributions (111,783) - (111,783)
-------------- -------------- --------------- ---------------
Balance June 30, 1997 19,962 $204,348 $21,315 $225,663
============== ============== =============== ===============
</TABLE>
See notes to financial statements
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
SIX AND THREE MONTH PERIODS ENDED
JUNE 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Six Months Three Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating activities:
Net income $38,593 $69,206 $26,026 $39,761
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization expense 17,686 21,572 8,177 10,562
Gain on sales of assets (25,000) (5,196) (25,000) -
Provision for losses - 1,133 - 1,133
Changes in operating assets and liabilities:
Accounts receivable 29,024 2,688 3,147 8,076
Accrued interest (148) (135) (75) (68)
Unearned operating lease income - 339 - 1,254
Accounts payable, other (4,512) 5 (41,687) 3,386
-------------- -------------- --------------- ---------------
Net cash provided by (used in) operations 55,643 89,612 (29,412) 64,104
-------------- -------------- --------------- ---------------
Investing activities:
Proceeds from sales of lease assets 57,000 14,000 57,000 1
Reductions in net investment in direct
financing leases 27,236 47,112 14,276 24,237
-------------- -------------- --------------- ---------------
Net cash provided by investing activities 84,236 61,112 71,276 24,238
-------------- -------------- --------------- ---------------
Financing activities:
Distributions to limited partners (111,783) (124,079) (55,891) (55,891)
Repayments of non-recourse debt (19,171) (17,481) (9,696) (8,842)
-------------- -------------- --------------- ---------------
Net cash used in by financing activities (130,954) (141,560) (65,587) (64,733)
-------------- -------------- --------------- ---------------
Net increase (decrease) in cash and cash
equivalents 8,925 9,164 (23,723) 23,609
Cash and cash equivalents at beginning
of period 205,418 91,084 238,066 76,639
-------------- -------------- --------------- ---------------
Cash and cash equivalents at end of period $214,343 $100,248 $214,343 $100,248
============== ============== =============== ===============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $6,655 $8,358 $3,216 $4,078
============== ============== =============== ===============
</TABLE>
See notes to financial statements
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
1. Interim financial statements:
The unaudited interim financial statements reflect all adjustments which are, in
the opinion of the general partners, necessary to a fair statement of financial
position and results of operations for the interim periods presented. All such
adjustments are of a normal recurring nature. These unaudited interim financial
statements should be read in conjunction with the most recent report on Form
10K.
2. Investment in leases:
The Partnership's investment in leases consists of the following:
<TABLE>
<CAPTION>
Depreciation
Expense or
December 31, Amortization June 30,
1996 of Leases Dispositions 1997
---- --------- -------------- ----
<S> <C> <C> <C> <C>
Net investment in operating leases $200,690 (17,686) (32,000) $151,004
Net investment in direct financing leases 40,467 (27,236) - 13,231
Reserve for losses (6,450) - - (6,450)
-------------- -------------- --------------- ---------------
$234,707 ($44,922) ($32,000) $157,785
============== ============== =============== ===============
</TABLE>
Operating leases:
The following schedule provides an analysis of the Partnership's investment in
property on operating leases by major classifications as of December 31, 1996,
acquisitions and dispositions during the quarters ended March 31, and June 30,
1997 and as of June 30, 1997.
<TABLE>
<CAPTION>
December 31, Dispositions June 30,
1996 1st Quarter 2nd Quarter 1997
<S> <C> <C> <C> <C>
Materials handling $208,787 $208,787
Food processing 35,653 35,653
Manufacturing equipment 30,263 ($25,988) 4,275
Motor vehicles 220,787 (220,787) -
-------------- -------------- --------------- ---------------
495,490 (246,775) 248,715
Less accumulated depreciation (294,800) ($9,509) 206,598 (97,711)
-------------- -------------- --------------- ---------------
$200,690 ($9,509) ($40,177) $151,004
============== ============== =============== ===============
</TABLE>
Equipment on operating leases was acquired in 1987, 1988, 1989, 1990, 1992 ,
1993 and 1995.
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
2. Investment in leases: (continued)
At June 30, 1997, the aggregate amounts of future minimum lease payments from
direct financing leases and operating leases are as follows:
Year ending Direct
December 31, Financing Operating Total
1997 $33,062 $26,689 $59,751
1998 - 51,948 51,948
1999 - 51,948 51,948
2000 - 25,974 25,974
-------------- -------------- ---------------
$33,062 $156,559 $189,621
============== ============== ===============
3. Non-recourse debt:
Note payable to financial institution is due in monthly installments of
principal and interest. The note is secured by an assignment of lease payments
and a pledge of the assets which were purchased with the proceeds of the note.
Interest on the note is at an annual rate of 9.25%. The balance remaining at
June 30, 1997 is due in monthly payments through 2000.
Future minimum principal and interest payments of debt as of June 30, 1997 are
as follows:
Year ending
December 31, Principal Interest Total
1997 $20,078 $5,897 $25,975
1998 43,042 8,906 51,948
1999 47,203 4,745 51,948
2000 25,286 688 25,974
-------------- -------------- ---------------
$135,609 $20,236 $155,845
============== ============== ===============
<PAGE>
ATEL CASH DISTRIBUTION FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
4. Related party transactions:
The terms of the Limited Partnership Agreement provide that the General Partners
and/or their Affiliates are entitled to receive certain fees for equipment
acquisition, management and resale and for management of the Partnership.
The General Partners earned partnership management fees equal to 5% of cash
distributed from operations and equipment management fees equal to 2% of full
payout lease rentals and 5% of operating lease rentals pursuant to the Limited
Partnership Agreement.
The Limited Partnership Agreement allows for the reimbursement of costs incurred
by ATEL in providing administrative services to the Partnership. Administrative
services provided include partnership accounting, investor relations, legal
counsel and lease and equipment documentation. ATEL is not reimbursed for
services where it is entitled to receive a separate fee as compensation for such
services, such as acquisition and disposition of equipment. Reimbursable costs
incurred by ATEL are allocated to the Partnership based upon actual time
incurred by employees working on Partnership business and an allocation of rent
and other costs based on utilization studies. Effective May 1, 1994, the General
Partners have elected to waive all reimbursements of administrative costs. In
1997 and 1996, $25,121 and $28,402 were waived.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Capital Resources and Liquidity
At June 30, 1997, the Partnership had cash balances of $214,343. Of this amount,
$55,891 was cash held for the distribution made to the Limited Partners in July
of 1997.
During the first and second quarters, the Partnership's primary sources of
liquidity were cash flows from lease rentals. The liquidity of the Partnership
will vary in the future, increasing to the extent cash flows from operations
exceed expenses, and decreasing as distributions are made to the Limited
Partners and to the extent expenses exceed cash flows from leases and proceeds
from asset sales.
The Partnership currently has available adequate reserves to meet contingencies.
As of June 30, 1997, the Partnership had borrowed approximately $2,817,500 with
a remaining unpaid balance of $135,609. The borrowings are non-recourse to the
Partnership, that is the only recourse of the lender is to the equipment or
corresponding lease acquired or secured with the loan proceeds. The Agreement of
Limited Partnership limits such borrowings to 80% of the total cost of
equipment, in aggregate.
The Partnership made distributions of cash from operations to the Limited
Partners in April and July 1997. These distributions were based on the results
of operations in the first and second quarters of 1997. The amount of each of
the distributions was $2.50 per Unit. The distributions represent an annualized
distribution rate of 2.00%.
If inflation in the general economy becomes significant, it may affect the
Partnership inasmuch as the residual (resale) values and rates on re-leases of
the Partnership's leased assets may increase as the costs of similar assets
increase. However, the Partnership's revenues from existing leases would not
increase, as such rates are generally fixed for the terms of the leases without
adjustment for inflation.
If interest rates increase or decrease significantly, the lease rates that the
Partnership can obtain on future leases will be expected to increase or decrease
in parallel as the cost of capital is a significant factor in the pricing of
lease financing. Leases already in place, for the most part, would not be
affected by changes in interest rates.
Cash Flows
Six months, 1997 vs. 1996
During the first six months of 1997, the Partnership's primary sources of cash
were from rents from operating leases and proceeds from asset sales. The amounts
of rents from leases decreased from $128,877 in 1996 to $76,006 in 1997, a
decrease of $52,871. The decrease is the result of scheduled lease terminations
and subsequent sales of the related assets. During the second quarter of 1996,
the Partnership received $25,938 relating to the FNN bankruptcy settlement. The
Partnership did not receive any similar amount in 1997.
Sources of cash from investing activities consisted of direct financing lease
rents and proceeds from lease asset sales. Direct financing lease rents
decreased by $19,876 due to lease terminations and sales of the lease assets.
The proceeds from these and other asset sales increased from $14,000 in 1996 to
$57,000 in 1997. The increase in sales proceeds was primarily due to an increase
the underlying amount of assets sold in comparison to the prior year.
In 1997, there were no sources of cash flows from financing activities. Uses of
cash for financing activities did not change significantly from 1996 to 1997.
<PAGE>
Three months, 1997 vs. 1996
Cash flows from operations decreased due to the same causes noted above for the
six month period.
Cash flows from investing activities increased due to the same causes noted
above for the six month period.
In 1997, there were no sources of cash flows from financing activities. Uses of
cash for financing activities did not change significantly from 1996 to 1997.
Results of Operations
The results of operations in future periods may vary significantly from those of
the first six months of 1997 as the Partnership's lease portfolio of capital
equipment matures. Revenues from leases are expected to decline over the long
term as leased assets come off lease and are sold or re-leased at lower lease
rates. The effect on net income is not determinable as it will depend to a large
degree on the amounts received from the sales of assets or from re-leases to
either the same or new lessees once the initial lease terms expire.
Six and three months, 1997 vs. 1996
Operating lease revenues have decreased due to lease terminations and asset
sales. Depreciation has also decreased due to the asset sales. Interest expense
has decreased as the average balances of outstanding debt have decreased due to
scheduled debt payments.
Revenues from direct financing leases decreased compared to 1996. These
decreases resulted primarily from scheduled lease terminations and asset sales
during the prior year.
Gains on sales of assets increased by $19,804 (six months) and $25,000 (three
months) compared to 1996. The increases resulted from larger amounts of
operating lease assets being sold in 1997 compared to 1996. The original cost of
operating lease assets sold increased from $41,807 in 1996 to $246,775 in 1997.
Gains on sales of assets is not expected to be consistent from one period to
another.
In the second quarter of 1996, the Partnership received $25,938 relating to the
bankruptcy of FNN. There were no such payments in 1997, nor were any expected.
The Partnership's expenses decreased by $4,198 for the six month period compared
to 1996. The decrease was primarily related to decreases in depreciation and
interest expenses. These decreases were the result of assets sales over the last
year and scheduled debt payments.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
Inapplicable.
Item 2. CHANGES IN SECURITIES.
Inapplicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
Inapplicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
Item 5. OTHER INFORMATION.
Inapplicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Documents filed as a part of this report
1. Financial Statements
Included in Part I of this report:
Balance sheet, June 30, 1997.
Statements of operations for the six and three month periods ended
June 30, 1997 and 1996.
Statements of changes in partners' capital for the six months
ended June 30, 1997.
Statements of cash flows for the six and three month periods ended
June 30, 1997 and 1996.
Notes to the financial statements.
2. Financial Statement Schedules
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are not required under the related instructions or are
inapplicable, and therefore have been omitted.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date:
August 14, 1997
ATEL Cash Distribution Fund,
a California limited partnership
(Registrant)
By: /s/ A. J. BATT
-------------------------------------------
A. J. Batt,
General Partner of registrant
By: /s/ DEAN L. CASH
-------------------------------------------
Dean Cash,
General Partner of registrant
By: /s/ F. RANDALL BIGONY
-------------------------------------------
F. Randall Bigony
Principal financial officer of registrant
By: /s/ DONALD E. CARPENTER
-------------------------------------------
Donald E. Carpenter,
Principal accounting officer of
registrant
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> dec-31-1997
<PERIOD-START> jan-01-1997
<PERIOD-END> jun-30-1997
<CASH> 214,343
<SECURITIES> 0
<RECEIVABLES> 18,950
<ALLOWANCES> 22,067
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 368,981
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 225,663
<TOTAL-LIABILITY-AND-EQUITY> 368,981
<SALES> 0
<TOTAL-REVENUES> 78,466
<CGS> 0
<TOTAL-COSTS> 25,094
<OTHER-EXPENSES> 8,124
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,655
<INCOME-PRETAX> 38,593
<INCOME-TAX> 0
<INCOME-CONTINUING> 38,593
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,593
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
